1. Field of the Invention
The present invention relates to an improved method for account reconciliation which can be used to match transactions in one accounting dataset to transactions in another accounting dataset, regardless of content, data format, or dataset size. It uses principles from information theory and data mining automatically to deduce which features relate one dataset to the other, compute empirical similarities between transactions, and use these to group transactions in a one-to-one, one-to-many, many-to-one, or many-to-many fashion, enabling a financial analyst to make sense of large datasets quickly and without time-consuming manual labor.
2. Description of the Prior Art
U.S. Pat. No. 7,895,094 describes a global account reconciliation tool provided to standardize reconciliation processes across various corporate lines of business. The reconciliation tool provides standard templates for entering transaction and account data. In this manner, open accounting items are more readily identified and reconciled. Once data is brought into these templates, the tool provides for either (1) auto-matching functionality relying on user-defined business rules, or (2) manual reconciliation.
This tool is limited to working with data which has been fitted into the templates it embodies, and any automation of the reconciliation process is not inherent to the tool, but relies on heuristics provided by the user. For the user, the process of installing and learning how to use the tool, and defining business rules could be time-consuming enough to outweigh the efficiencies of automated reconciliation. Furthermore, the accuracy of reconciliation results depends heavily on the suitability of the heuristics embodied in the user-provided business rules. This in turn makes the tool dependent on the expertise of the user in formulating heuristics.
U.S. Pat. No. 7,970,668 discloses a system and method for automated comprehensive reconciliation processing. This invention includes the maintenance of an automated checklist of the various reconciliation steps, enabling maintenance of an audit trail and generation of metrics.
This method does not automate the actual matching of transactions in one dataset to transactions in another, but instead is essentially a tracking system allowing an analyst to ensure that data is complete and that all necessary reconciliation steps are duly completed. The most time-consuming part of account reconciliation, for datasets of any reasonable size (upwards of thousands of records), is the process of actually matching data from one dataset to another. Therefore, for such datasets, this method is unlikely to achieve significant efficiency and time-saving in the area where it matters most.
U.S. Pat. No. 8,019,739 discloses a method and system for an online-like account processing and management. This method includes: reading at least one batch file containing a plurality of records, each of the plurality of records being related to an associated one of a plurality of accounts; identifying which of the plurality of records relate to same ones of the plurality of accounts; identifying one of the accounts; and, processing all of the records identified as relating to the one of the accounts together and independent of processing any of the records relating to any other of the plurality of accounts.
Again, this method does not automate the actual matching of transactions from disparate datasets, which for reconciliation problems of any significant size is highly time-consuming and labor-intensive, even if data is available real-time. Reconciliation is one step in the method but the method does not disclose how to automate this step. Therefore, for such datasets, this method is unlikely to achieve significant efficiency and time-saving specifically in reconciliation.